Microsoft Bid A Windfall For Yahoo! Founders
Posted February 7, 2008on:
Here’s a review of what has the microsoft bid caused!……a few smiles and a few sad faces
Article on Forbes
Yahoo! co-founders and execs Jerry Yang and David Filo will likely be out of a job if their company is acquired by Microsoft. Fortunately for the pair, they’ve accumulated a hefty fortune this week to fall back on during retirement.
Based on stock ownership information reported in Securities and Exchange Commission filings, the value of Filo’s stockpile of Yahoo! (nasdaq: YHOO – news – people ) shares soared $796.4 million since Microsoft (nasdaq: MSFT – news – people ) announced its bid for the Internet portal. The value of Yang’s stake jumped $436.4 million.
If they decide to sell their company to Microsoft, Yang and Filo would reap even bigger rewards. Shares of Yahoo! are still trading a discount to Microsoft’s bid of $31 per share. Plus, Yahoo! would likely try to negotiate a higher price.
While a windfall for the Yahoo! guys, the past week has squeezed the fortunes of those tied to Microsoft. Wall Street is concerned by the amount of money Microsoft will need to pay to acquire Yahoo! and the difficulties of integrating two tech giants with vastly different corporate cultures. As of midday Tuesday, shares of Microsoft are down 8.4% since the announcement of the deal.
The decline means a massive hit to the net worth of Microsoft’s largest shareholder and Chairman Bill Gates. He’s been clipped for $2.3 billion. Chief Executive Steven Ballmer was stung with a $1.1 billion loss.
It also means a sizable slide for Paul Allen. The Microsoft co-founder has been unloading stock since his departure from the company but still reportedly owns over 100 million shares.
But the losses of the Microsoft trio look paltry in comparison to that of the Google (nasdaq: GOOG – news – people ) guys. Google’s big three–Chief Executive Eric Schmidt and founders Sergey Brin and Larry Page–own the vast majority of Google’s class B shares. The private shares are similar to the class A shares that trade publicly but have more voting power.
Google shares have declined 10.9% from the close of trading Thursday to midday Tuesday. Much of the fall can be blamed on Google’s disappointing fourth-quarter earnings release, but the possibility of a “MicroHoo!” isn’t helping. Microsoft has made it clear that a big reason behind the attempted Yahoo! acquisition is to challenge Google’s online hegemony.
Even worse is the battering Google shares have taken over the past three months. They’ve plummeted $221.65 or 30.6% after an excessive rally. The decline means the value of the Google position of Brin, Page and Schmidt has dropped nearly $15 billion since November.